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Cohabitation - the next instalment…

In our January Edition, Chris McIntosh provided an overview of property rights of unmarried couples. The case of Kernott –v- Jones [2010] EWCA Civ 578 brings the position up to date.

Leonard Kernott and Patricia Jones purchased a property together (in joint names with a joint mortgage) in 1985. They lived there together for eight years. In 1993, Mr Kernot moved out. Ms Jones remained living at the property with their two children, paying the mortgage and expenses herself – without contribution from Mr Kernott.

In 2006, 13 years after he had moved out, Mr Kernott issued proceedings to realise his share of the property. The court was invited to determine his entitlement. Unsurprisingly, Ms Jones argued that her interest (irrespective of the legal title) had increased since 1993, on account of her contributions without assistance from Mr Kernott.

In 2008, a County Court Judge agreed with her and awarded her a 90% interest in the property. Mr Kernott appealed to the High Court which, in July 2009, upheld the earlier decision. Mr Kernott further appealed to the Court of Appeal.

In May 2010, the Court of Appeal overturned the earlier decisions and found that Mr Kernott had a 50% interest in the house interest notwithstanding the passage of time and his lack of contribution since 1993. Ms Jones referred the case to the Supreme Court which heard legal argument on 4 May 2011. Judgment is awaited with considerable interest…

The Supreme Court is right to take its time – its decision will prove significant in our society where many couples choose to live together but not to marry or enter into a civil partnership. As Chris reported in his earlier piece, the most recent ‘clarity’ on cohabitees’ property rights came four years ago in Stack –v- Dowden. That case established the presumption (which will carry the day in many cases) that one’s interest in a property is defined by the legal ownership. Overcoming that starting presumption (as Ms Jones seeks to do) was made more difficult as a result.

The central conundrum with which the Supreme Court must grapple is whether it is fair to restrict a claim to property to the legal interest, or whether events following separation could and should give rise to a different result. Should a court be able to infer what the parties intended, and use that inference to decide that their respective interests in the property are different from the legal title?

The headline message remains: cohabiting couples should take legal advice when purchasing a property. The preparation of a Deed of Trust that records clearly what is intended, and (in any event!) a review of the position on separation, are eminently sensible steps. Doing nothing might have some very unexpected and costly consequences.